Euro crisis: “With that we buried the Maastricht Treaty, the legal basis for currency union”

…Mr Asmussen, a member of the ECB governing council, said growth measures – agreed without reopening the fiscal treaty – could help drive European integration.

“The benefits of a currency union are so outstanding that they should be stabilised by deepening, which means a fiscal union and banking union as well as a democratic legitimised political union,” said Mr Asmussen yesterday in a speech in Berlin, sketching out his vision for the EU in 10 years’ time.

Picking up from where his boss, ECB president Mario Draghi, left off earlier this month, the German-born economist listed growth measures that would not require extra spending, from labour market reform to labour force mobility. The “critical mass” of measures was more important than their legal form, he said.

Mr Asmussen called for a Europe-wide financial regulator and finance watchdog, as well as an EU budget “special fund” for the euro zone, financed by the earnings of a tax on financial transactions.

After years of government-led crisis measures, efforts to promote greater democratic legitimacy were overdue in the EU. His proposal: to give the European Parliament the right to initiate legislation.

The Taxation Trends in the EU report also said the property collapse in countries such as Ireland served as a powerful reminder of the danger to budgetary stability of over-reliance on once-off property transaction taxes.

“In Greece, Ireland and Spain annual revenue levels fell by between 0.4 per cent and 0.6 per cent of GDP between 2008 and 2010; for the latter two countries, the destabilising effect was even greater considering that by 2008 revenues had already dropped by about 1 per cent of GDP compared to their peak two years earlier.”

Citing 2010 data, the study said Ireland had the EU’s fifth-lowest tax take as a proportion of national economic output.

Irish tax revenue compared to gross domestic product was 28.2 per cent, a little above fellow euro country Slovakia (28.1 per cent) and in the same league as Bulgaria (27.4 per cent) and Latvia (27.3 per cent).

The lowest tax revenue was in Lithuania (27.1 per cent) and the highest was in Denmark (47.6 per cent) which was followed by Sweden (45.8 per cent).

While tax revenue rates were higher in the countries which were in the EU before the 2004 expansion, Ireland and its fellow bailout recipients were outliers.

Alexis Tsipras [the leader of Greece’s anti-austerity Syriza coalition] wound up his press conference in Berlin by warning that Europe could be dragged into another military conflict if the economic crisis really deteriorates:

#Tsipras: we need to learn from history or face prospect of another world war. Dialogue is key to progress. Press conf ends after 1 hr

And while Tsipras was taking in Berlin, one of his economic advisers was telling Joel Hills of Sky News that Syriza would not seek to withdraw Greece from the eurozone without a referendum (and, of course, it’s current position is that Greece should remain in the euro, but with a ‘better’ financial programme)